http://www.washingtonpost.com/wp-dyn/content/article/2005 /09/05/AR2005090501439.html?sub=AR

Another Look at Fuel Efficiency
Soaring Gas Prices Make Smaller Cars, Hybrids Attractive

By Griff Witte
Washington Post Staff Writer
Tuesday, September 6, 2005; D03

The spike in gasoline prices has emboldened advocates for more fuel-efficient vehicles and put the auto industry on notice as consumers move to smaller, less energy-hungry cars and trucks.

The shift began even before Hurricane Katrina disrupted oil production and distribution in the Gulf; drivers have been feeling a sharpening pinch at filling stations all summer long. But supporters of hybrids, electric vehicles, hydrogen fuel-cells, bio-diesel fuels and other alternatives that promise lower gas consumption say the hurricane could be a painful wake-up call.

"If there is a silver lining in this awful cloud, it's that it's reminded Americans how vulnerable we are and why we have to end our dangerous addiction to foreign oil," said David Goldstein, who has been president of the Electric Vehicle Association of Greater Washington for 25 years.

Goldstein said interest in alternatives to the conventional internal combustion engine has never been higher, with Internet chat rooms buzzing over the consequences of $3 and $4 a gallon gas.

Americans bought 5 percent fewer sport-utility vehicles in August compared with the year before. And they may not be coming back: General Motors sales analyst Paul Ballew said in a webcast last week that he does not believe sales of large SUVs will return to their previous highs, citing gas prices as a prime reason why.

Meanwhile, sales of gas-electric hybrids, while still an extremely small percentage of the total market, are expected to double for the year. Sales of one hybrid brand, the Toyota Prius, were up 115 percent in August, with the company maintaining a waiting list for the car.

Spokesmen for both Toyota and Honda, the two auto manufacturers that have been most aggressive in selling hybrids, said that the higher gas prices may work in their favor and that they plan to continue to ramp up production of their lowest-polluting, most fuel-efficient vehicles.

"A year ago we said that if gas goes to $3 a gallon and stays there for a sustained period of time, it's reasonable to assume that people's intentions will start to change. And we're seeing that now," said Ernest Bastien, vice president of Toyota Motor Sales USA Inc.'s vehicle sales group.

"If the market shifts that way, it certainly won't hurt us," said Kurt Antonius, a spokesman at American Honda Motor Co., which last week introduced a Civic hybrid rated around 50 miles per gallon.

Officials at General Motors and Ford, however, cast doubt on how lasting or robust the nation's appetite for hybrids will be. U.S. manufacturers have traditionally lagged behind their Japanese counterparts in promoting hybrids. Ford recently put two hybrid models on the market, with plans for three more next year. GM doesn't plan to sell hybrids on a mass scale until 2007.

"Even at $4 a gallon, [buying a hybrid] is not a financial decision I'd make because you've got to pay about $4,000 or more upfront [in higher sticker price] for the privilege of driving around in a hybrid," said George Pipas, Ford's U.S. sales analyst.

Larry Burns, GM's vice president for research and planning, said that the company is playing catch-up on hybrids in the near term but that it is putting its ultimate focus on hydrogen fuel cells. Burns said that hybrids are unlikely "to have a meaningful impact on petroleum consumption" and that automakers have to move away from petroleum entirely if they are serious about cutting emissions and reducing air pollution.

Hybrids, he said, still depend to a large extent on gasoline even though they can also run on battery power.

Burns said that he expects GM to put a significant number of hydrogen fuel-cell cars on the road by 2015 and that those cars will have no emissions. Others think that hydrogen cars may be 30 or 40 years off.

"Anybody who expects to see fuel cells widely available in 10 years is dreaming," Toyota's Bastien said.

Regardless of how long hydrogen cars take to develop, some industry observers say that if gas prices continue to rise, automakers may have no choice but to build more cars that emphasize fuel efficiency over size.

"The nation has had something of a psychological shock. And that's good for us," said Jim Hossack, of automotive industry consultants AutoPacific Inc. "Our implicit energy policy has been, 'Abundant cheap gas for all. But please don't use too much.' That's a stupid policy. I've never heard a senator or congressman say high gas prices would be good for us. But the truth is they would be good for us."

Some are seizing on the price increase to make their case for other alternatives beyond the hybrids now available.

Late last week, a group of electric-car advocates created a group called Plug In America to promote the idea of using the power grid to operate vehicles. The electricity cost of charging up such a car, they said, would be the equivalent of 60 cents a gallon.

In a telephone news conference, former CIA director R. James Woolsey, a member of that advocacy group, expressed support for the idea, saying plug-in hybrids could be run on electricity from renewable sources such as wind or solar power, or with cleaner burning fuels such as ethanol. "We have a very good chance at making a substantial dent in our reliance on oil soon," Woolsey said.

The major automakers, however, have already rejected purely electric cars because they say there's is not enough consumer interest. And while they have been monitoring hybrids that plug into the electric grid, they have been reluctant to fully embrace the idea.

Goldstein, head of the local electric vehicles association, thinks that is a mistake -- both for environmental and business reasons.

"There's just a huge pent-up demand out there for electric cars. The technology is very, very attractive to people," he said. "There's a sea change taking place in the automotive market. But some manufacturers don't seem to get it. They're not listening to their customers."